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Blog Post

Connected dog collars more valuable to M2M market than dog owners?

by Robert Metzler
06/25/2014

As the owner of a speedy canine who loves to run, I live in fairly constant fear that our family’s dear friend dogcollarand occasional therapist will one day break free of our yard and meet his untimely demise. My fear is not unfounded; he’s made his escape before and managed to evade danger and return to us.

We do have one of those electronic fences in place but I will never be comfortable that it’ll remain foolproof…batteries die, dogs “forget,” etc. I can see it in his eyes every time he spots a squirrel across the way. And once he’s out, there’s no telling where he’ll go.

So you can imagine my delight to learn that electric collars have evolved vis-à-vis the WhistleGPS device, designed to provide constant tabs on Rex’s whereabouts so that, should my greatest fear come true, we’ll instantly know where he is and be able to carry out a quick retrieval. The days of the “Lost Dog” sign appear to be bygone.

Putting my personal interest aside, the Whistle device portends a world of connected devices that we’ve been touting all along. Namely, that the Internet-of-things and the M2M market will largely consist of devices with extremely narrowcast functions, designed to do one thing but do it very well, and will really only ever need to transmit a few of packets of data at a time. To that end, the potential hurdle in the race for new IoT applications remains: if these devices are forced to pay the same access costs as bandwidth-hungry consumer smartphones, can the economics support sustained adoption?

In the Whistle example, the collar is set up to collect data on your dog’s activity over the course of an entire day, but would only transmit that data once per day, or perhaps not at all, depending on your preferences. And if the dog gets loose, it may transmit the dog’s location data more often, but in very small packets.

Given that, Whistle surely had a Catch-22 as it formalized its business plan. Even as peace-of-mind would seem to carry high value for consumers, if it had to charge $30 or $20 or even $10 per month for network access, the business model probably wouldn’t hold up. As it is, the company charges customers a $5 monthly service fee for pet location services, which is nominal for all intents and purposes.

How Whistle got there gives us a glimpse into how dynamics are changing to facilitate IoT adoption.

To keep its recurring costs low, the company partnered with Sigfox, which is building an alternate cellular network optimized and priced for these kinds of low-bandwidth, low-use transmissions. The network only supports the smallest amount of information at a mere 100 bits per second, but it can handle millions of such connections. In comparison, the carrier networks support faster speeds and higher bandwidth, but with far fewer connections. Hence the higher access costs from the carriers.

If we look at other targeted IoT solution areas – utility meters or traffic sensors or automated irrigation controls –the common denominator remains that these devices generally only transmit intermittently and use small data packets. All have the potential to improve the way we live, but delivering on that promise must make economic sense first and foremost.

We’ve speculated in past discussions that in order to facilitate these economics, carriers could be mandated to reserve 2G spectrum specifically for low-use M2M applications in the Internet-of-Things. Or at least that we would see big M2M stakeholders lobby to keep some 2G dedicated spectrum around, to keep the cost of a switchover and higher access costs from busting their future budgets.

 

A more intriguing case – that entrepreneurs would recognize a market need for “less” and build it profitably from scratch – could be taking shape before our very eyes.